In the US it also made moves to turn itself into an advertising platform for restaurants, selling ad space within the app to those seeking to boost delivery orders to increase its rather meagre 10.7 per cent gross margin. The idea was to lure JustEat’s loyal local restaurants away to its site, allowing them to cut costs by using their own couriers – and to bring their customers with them. Last year, Uber Eats tried to make a pre-emptive strike against JustEat, announcing plans to cut fees for delivery in the UK and Ireland and allowing restaurants to use its app to carry out their own deliveries, capping its fees at 30 per cent of the value of an order, compared with a maximum fee of 35 per cent. A merger with rival company Takeaway was agreed last year (this was delayed by a CMA investigation and then green-lighted provisionally last month), making it the largest online delivery company outside of China, surpassing Uber Eats. Alongside Greggs, McDonald’s is the most popular food brand in the UK – and JustEat has them both. Earlier this year, JustEat looked like it was slowly winning the war prying McDonald’s out of its exclusive contract with Uber Eats and becoming another partner. This, coupled with rapid international expansion, shows just how far Deliveroo has departed from the strategy it followed in the early days – described by insiders at the time as “remarkably capital efficient” – when it spent almost nothing on marketing and instead focused on growing by word of mouth.ĭeliveroo and its competitors take a 30 per cent cut on average from restaurants, but in the case of big ticket brands, they offer special discounts to capture orders that will come from having well known names on their sites. The company launched its first nationwide TV campaign last year, spending money on targeted advertising as well as normal TV spots and hired its first chief marketing officer.Īlthough Deliveroo has not confirmed advertising spend for 2019, a report by Digiday claims it spent a reported £10m annually on media in 2018 when it hired agency the7Stars, and that the expense was up year on year. In practice, this means one thing: more advertising spend. To fight off the competition Deliveroo came up with a three-pronged strategy last year, the details of which were rather vague: it said it wanted to target “switchers” (people who already use other delivery sites) to “win” every neighborhood it operates in and to make sure that the food it has on the site is the best quality. So JustEat, Deliveroo and Uber Eats have fought for market share and emptied their pockets to offer lower rates to restaurants and bigger marketing campaigns in a bid to capture enough customers to boot the others out of town. In a market where there is no clear dominant business, the winner is the one left standing.

In the last few years, the three major UK players have engaged in a price war that analysts have described as a “race to the bottom”.

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